- Wellington Management leads Series B funding round in company
- Proceeds to pay for comedy, lifestyle and gaming shows, films
Defy Media Inc., home of popular web video channels Smosh and Clevver, raised $70 million in a funding round led by Wellington Management, money that will help the company speed up its growth in the burgeoning online video market.
Proceeds from the Series B funding will be used to produce and market movies and online series, according to Defy Media President Keith Richman. He declined to say how large a stake Wellington purchased, except to describe it as a minority holding. Defy Media plans to develop more comedy, lifestyle and gaming-oriented programming.
While peers such as Maker Studios, AwesomenessTV and Fullscreen have sold out to larger media companies, Defy Media has remained independent and taken on relatively little outside capital. Viacom Inc. acquired a minority stake in 2014, while Lions Gate Entertainment Corp. and Zelnick Media Capital obtained their holdings from investments in ventures that merged to form Defy Media, according to Richman.
Richman and Chief Executive Officer Matthew Diamond see an opportunity to increase revenue as mainstream media companies follow their viewers online. Streaming services, technology conglomerates, media companies and mobile providers are all looking for more of what New York-based Defy makes: short-form and long-form videos that appeal to young viewers.
While advertising once generated all of the Defy Media’s revenue, licensing fees from selling shows to Netflix Inc., YouTube and others now account for 25 percent to 30 percent of annual sales, Richman said. Revenue last year topped $100 million, he said.
Up for Grabs
“There is a lot of money up for grabs,” Richman said. “We’ve built these popular networks with millions and tens of million of viewers, and we want to do more to capitalize and accelerate the advantage we have strategically. We need manpower and ramped-up programming.”
The company released its first film, “Smosh: The Movie,” last year, and eventually sold the streaming rights to Netflix. Smosh, founded by the comedy duo Ian Hecox and Anthony Padilla, is the 12th largest YouTube channel, with more than 22 million subscribers, according to data from VidStatsX.com.
Defy Media just finished production of its second movie, which will air on the YouTube Red paid streaming service. “Honest Trailers,” a video series that parodies movie trailers, earned an Emmy nomination for short-form programming, the company’s first. Defy Media is producing 1,000 hours of programming a month, Richman said.
“Two things we know are happening: People are concerned about how they’ll reach younger audiences, and existing TV providers are all looking for ways to lower programming costs,” Richman said. “Our programming provides a solution for all of it.”